Effects of Islamic Banking on Employment

Abstract

Islamic Banking (IB) holds the potential of creating positive impacts upon the economy thanks to its governing principles. An extension of this potential is that the employment should be positively affected by Islamic banks. This study comparatively investigates the relationship between Islamic and private commercial banking loan and sectorial employment in Turkish economy through Granger causality method. The loans offered by IBs affect employment in manufacturing and construction sectors whereas such an impact is not identified for others. Therefore, in sectors with the exception of these two, there is no finding suggesting that IBs have positive impacts in respect to employment on real economy.